FASHION TECH FORUM 2015: LESS IS MORE Personalization and Customization DEBORAH WEINSWIG Executive Director Head of Global Retail & Technology Fung Business Intelligence Centre deborahweinswig@fung1937.com New York: 646.839.7017
FASHION TECH FORUM 2015: LESS IS MORE Founded by global brands guru Karen Harvey in 2014, the New York Fashion Tech Forum curates conversations among industry leaders on the intersection between fashion and technology. Over 700 entrepreneurs, retail CEOs, investors, thought leaders and technology innovators attended the one- day annual conference, which took place on June 11. Elle Editor- in- Chief Robbie Myers, Theory Founder Andrew Rosen, Eco- Age Creative Director Livia Firth, CEO of Goop Lisa Gersh and Fung Business Intelligence Centre (FBIC) Executive Director Deborah Weinswig were among the invited speakers. Panel topics included the future of retail, personalization and sustainability, among many others. This year s forum emphasized the fact that many shoppers have embraced an eco- friendly and waste- conscious age. Sustainability initiatives are taking creative forms that include renting out boxes of outfits, buying and reselling vintage fine jewelry, and implementing eco- friendly practices in supply chains. The notion of less is more is being redefined, and many companies that have incorporated sustainable practices into their business models have won more customers. In the coming years, millennial and millennial- inspired shoppers are going to drive consumer trends. However, fashion companies are not yet fully engaging consumers with regard to sustainability. According to Deloitte, two out of three fashion companies are not focusing on sustainability as a way to market their products and seven out of 10 companies are not focusing on managing environmental and resource issues throughout their supply chain. By 2025, 75% of the global workforce will consist of millennials who care about resource scarcity, climate change and income inequality. A Nielsen survey called The Global, Socially Conscious Consumer found that 63% of respondents under 40 said they are willing to pay more for socially responsible products. FBIC identified some early- stage presenters at the Fashion Tech Forum that are poised to drive the sustainability trend. They include Gleem & Co., which reduces the environmental impact of jewelry production by offering an online marketplace for vintage fine jewelry; Le Tote, which rents out outfits, minimizing excess apparel purchases; and Reformation, which ensures that its entire supply chain conforms to sustainable practices. Along the same lines, Normal and Shoes of Prey offer custom- made products that appeal to consumers looking to reduce excess purchases. These companies are successfully capturing and monetizing the mass customization trend. 2
Normal and Shoes of Prey are two companies that are appealing to consumers desire for sustainable fashion by offering custom- made products, which tend to reduce excess consumption. According to the Harvard Business Review, mass customization is a production process that combines elements of mass production with those of bespoke tailoring. Retail mass customization is not a new concept: back in 1994, Levi Strauss started the trend with made- to- order jeans. Today, with recent advances in 3- D printing and e- commerce technologies, retailers have access to design tools and order fulfillment systems that let them offer customized products at reasonable price points. The market potential for customization is huge and mostly untapped right now. Bain & Company estimated that the market for customized footwear alone was $2 billion a year in 2013. And a 2013 Bain survey of more than 1,000 online shoppers revealed that 25% 30% of them were interested in trying customization options, but that only 10% had done so. Founder: Nikki Kaufman Founded: 2013 Headquarters: New York, NY Number of employees: 22 About Normal Founded on the belief that one size fits none, Normal uses 3- D printing technology to produce tailor- made earphones for individual customers. The earphones personalized fit allows them to deliver sound better and, hence, provide a better listening experience. At Normal s store in New York City s Chelsea neighborhood or via its mobile app, customers take photos of each ear and follow a guided design flow to configure their own unique pair of earphones. They can choose colors and cord length, among other customizable options. Once the design is completed, Normal assembles the components within 48 hours using 3- D printing technology. Each pair is sold for $199, including tax, shipping and an engraved, personalized case. Normal s Founder, Nikki Kaufman, said the idea for the company sprang from her own frustrating experience with poorly fitting earphones. Previously, a pair of custom- fitted earphones could cost up to $2,000 dollars. Announced Date Investor Transaction Type Size (USD Mil.) April 22, 2015 Undisclosed Private Placement 2.0 March 20, 2015 Undisclosed Private Placement 0.12 October 6, 2014 Undisclosed Private Placement 1.0 April 8, 2014 Undisclosed Private Placement 1.1 October 31, 2013 Undisclosed Private Placement 2.08 Current Investors Investor Relationship Type Company Type Maveron Current Private Investment Firm Raptor Holdco GP Current Private Investment Firm RRE Ventures Current Private Investment Firm TYLC Lab Current Private Investment Firm Source: S&P Capital IQ 3
Founders: Jodie Fox, Mike Knapp and Michael Fox Founded: 2009 Headquarters: Sydney, Australia Number of employees: 75 About Shoes of Prey Shoes of Prey is a retail footwear brand that delivers your perfect shoes. Shoppers are able to design their own shoes online and have them made by hand and delivered within about five weeks. Shoes of Prey products include flats, heels, wedges, sandals and boots in prices ranging from $150 to $300. The shoes also come with excellent service: customers are able to return them within 365 days. Since its inception in 2009, Shoes of Prey has achieved tremendous success: the company hit multimillion- dollar revenue in under two years and expanded from three people to 75 people in five years. Date Investment Round Investors Size (USD Mil.) April 2009 Seed Jodie Fox, Mike Knapp, Michael Fox 0.05 June 2012 Series A CrunchFund, Southern Cross Venture Partners, Bill Tai, David Spector, Mike Cannon- Brookes, Richard Baker, BridgeLane Capital, MLC 3.0 March 2014 Series A Sherpa Capital Undisclosed December 2014 Series A Sherpa Capital, Khosla Ventures 5.5 Source: CrunchBase 4
Founder: Yael Aflalo Founded: 2009 Headquarters: Los Angeles, CA Number of employees: 101 250 About Reformation Reformation targets fashion customers who value sustainable manufacturing and business practices. The company designs and manufactures clothes in its own facility in downtown Los Angeles using environmentally friendly materials and practices that include a roof outfitted with renewable- energy power generators, recycled packaging and sustainable fabrics. Reformation sources over 80% of its products from local and domestic suppliers. And since its supply chain is local, the company is able to move designs to production within a month, so customers are always wearing what s trending now. Throughout the production chain, Reformation makes sure that most of its hourly workers get paid more than minimum wage, and the company provides health benefits to all full- time employees. At every store, Reformation installs energy- efficient fixtures and uses recycled hangers. Biodegradable products are used for day- to- day cleaning, too. Date Investment Round Investors Size (USD Mil.) April 2015 Series A Karlie Kloss, Miroslava Duma, Andrew Rosen, 14W, Stripes Group 12.0 Source: TechCrunch 5
Founder: Nikki Lawrence Founded: 2014 Headquarters: New York, NY Number of employees: 5 About Gleem & Co. Sustainability is built in to Gleem s business offering: recycling timeless jewelry and thereby helping the consumer save money. Gleem combines the convenience of an online marketplace and the elegance of designer jewelry shops. Customers can find carefully curated, one- of- a- kind, pre- owned fine jewelry on the website at up to 80% off retail prices. Gleem functions as a trusted intermediary for consumers looking to buy or sell unique pieces, often providing the buyer with great savings. According to Gleem Founder Nikki Lawrence, the company is seeing strong consumer demand globally, especially from the Middle East and Southeast Asia. While particular investors in Gleem cannot be identified, the company has participated in ebay s six- month- long accelerator program, Friends of ebay, in New York City since in April 2015, and Lawrence disclosed that Gleem has been introduced to angel investors within the ebay network. Founders: Rakesh Tondon & Brett Northart Founded: 2012 Headquarters: San Francisco, CA About Le Tote At Le Tote, fashion is recycled. The outfit rental subscription company allows consumers to get unlimited access to clothing and accessories for $49 a month. With a subscription, a consumer receives a shipment box of three garments and two accessories (chosen by either a stylist or the subscriber herself); she can wear the items and return them to the company, and then receive her next shipment. In essence, Le Tote has brought Rent the Runway to everyday wear on a subscription basis. In 2014, the company rented out $15 million worth of apparel and accessories from 80 brands, including Sam Edelman, Sanctuary, BCBG, French Connection, Splendid and T Tahari. Cofounder Rakesh Tondon projected that the site would generate $12 million to $13 million in revenue by renting $75 million to $80 million worth of goods in 2015. Le Tote is poised to win consumers who want to be surprised by unlimited new clothes, who are eager to save money and who want to minimize the environmental impact of excess ownership. This model works especially well with young urban professionals with limited closet space, a tight budget and a big appetite for fashion. 6
Date Investment Round Investors Size (USD Mil.) July 2013 Seed Round Y Combinator, Scrum Ventures, Google Ventures, Andreessen Horowitz, 500 Startups, Lerer Hippeau Ventures Feb. 2015 Series A Sherpa Ventures, Basset Investment Group, FundersClub, Arsenal Venture Partners, EPIC Ventures, Lerer Hippeau Ventures, AITV, Azure Capital Partners, Simon Venture Group Source 1.8 8.0 Deborah Weinswig, CPA Executive Director Head of Global Retail & Technology Fung Business Intelligence Centre New York: 917.655.6790 Hong Kong: +852 6119 1779 deborahweinswig@fung1937.com Cam Bolden cambolden@fung1937.com Sunny Chan, CFA sunnychan@fung1937.com Marie Driscoll, CFA mariedriscoll@fung1937.com John Harmon, CFA johnharmon@fung1937.com Amy Hedrick amyhedrick@fung1937.com Aragorn Ho aragornho@fung1937.com John Mercer johnmercer@fung1937.com Charlie Poon charliepoon@fung1937.com Kiril Popov Kirilpopov@fung1937.com Stephanie Reilly stephaniereilly@fung1937.com Lan Rosengard lanrosengard@fung1937.com Jing Wang jingwang@fung1937.com 7